a white house proposal that would apply a tougher standard for measuring inflation and cost-of-living adjustments known as chained cpi. this is an hour and 35 minutes. >> come to order. price is what you pay, value is what you get turc." we are here to discuss the budget proposals. as we do in the system and the value in what we are paying. pacific lay, i would like to focus on the value of medicare and medicaid. this touches the lives of more than 100 million americans, one in every three citizens. i also want to examine the progress the administration has it isn implementing -- implemented correctly, more americans will gain access to health care next year as result the law.

news programs fall under the purview of our witnesses and in sibelius. am sure you're are quite busy, madam secretary. in 167 days millions of americans will begin enrolling in health insurance plan submission marketplace. time is short. we need to use each of these days to make sure the marketplaces are up and running, ready to help uninsured americans axis affordable coverage. the present budget request a total of $5.2 billion for program management at the centers for medicare and medicaid services. of this, $1.5 billion would we to establish health insurance marketplaces. i am concerned that not every state, including montana, would have an insurance marketplace established in time. the moneyow how

requested would be used to ensure the marketplaces would be ready to go. the budget also requests $550 million for outreach and education for the health insurance marketplace is. for the marketplaces to work, people need to know about them. people need to know their options, how to enroll. i would also like to know -- i want these new marketplaces to be simple and successful. small businesses would be able to focus on job creation. plan movingow the forward. that better communicate the benefits of the affordable care act. i am concerned the lack of clear information as him into misconceptions and misinformation and people generally dislike what they don't understand. i hear from people on the ground the montana that they're law,sed about this

worried about the impacts and how marketplaces will affect their families and businesses. especially from small businesses in montana. i reached out to someone who works in montana with the senate for real affairs. she is been traveling across the state talking to business groups and consumers about new marketplaces. she reported that few people are attending the informational meetings. those that are expressed and about thederstanding marketplaces them what they offer. there is a lot of misinformation about how it is all going to work. this difficulty is compounded at the unknown as to what the marketplaces will look like. understandnts don't the role of tax credits because they don't have enough information. the administration is to do a better job. it is matched montana.

-- just montana. 57% of americans say they do not have enough information about the law to understand how it will effect them. the lack of clear information as living people to turn to incorrect information area 40% of americans thought they law establishes a government panel to make end-of-life decisions for people on medicare. 40% thought that. the law does not provide that. it also found that 50% in -- thought the law has a public option. benefits of the affordable care act -- it deserves a feeling. .- failing grade wealthy beneficiaries should

pay high premiums, i agree with that. the machine not take private lands offering medicare benefits to higher rates than traditional medicare. inry dollar invested fighting fraud generates 500% return in taxpayers money received. that is good. concern me. i'm concerned the proposed level of cuts cuts in nursing homes may be too high. it reduces access to care area also concerns over the chained cpi proposal. it not only impact social security, but it reduces payments some medicare providers and increases out-of- pocket cost for some seniors. hit our seniors with a one-two punch. these chained cpi changes on top of several billion dollars in the care. this will require compromise. everybody needs to pitch in.

we cannot balance the budget on the backs of america's seniors. budget deficits cannot be cuts to medicare or a package of tax increases. we need a balanced approach that is fair to all. the budget also recognizes the need to work with congress to reauthorize the temporary systems to needy families. this is a vital lifeline to our poorest families. and it's a program to be a more efficient job creator and pathway out of poverty. i am happy the budget invests in --ly learning, injured in including job care. one had to thousand kids will start off on the road to early success. montana families understand the value of good education and maintain our responsibilities as parents and neighbors area did secretary, as they think about these issues in their effect of .he budget, remember the advice

>> thank you, mr. chairman. thank you for's a tool in today's hearing. .- scheduling today's hearing last week the president released his proposed budget. even though it was 65 days late, it does not appear that the administration used the extra time to find ways to address the critical outlets facing our country. perhaps most significantly, the budget fails to address the fundamental challenge of health care entitlements pending in any significant way. --t this document lacks an encourage it makes up in the same partisan roderick and policies. hetoric and policies.

is anytly if this budget indication, the administration is not interested in taking up the challenge areas under the budget, medicare and medicaid pending would reach nearly $11 trillion over the next decade. in mandatory health spending would nearly double from 700 and one billion in 2013 two $1.4 trillion in 2023. that is if the numbers are right. nearly $7 trillion in medicare over the next 10 years, the hot oil insurance -- hospital insurance will run significant deficits. according to the 2012 medicare report, the trust fund has $5.3 trillion in unfunded liabilities and is expected to be insolvent by the year 2024.

under this budget, it will continue on its path of muncie. .he budget -- insolvency the budget was spent on medicaid even though it will a spending more than $4 trillion and that a ram over the next 10 years. under this budget, federal medicaid spending says it will increase by 25% from 1.6% to two percent of the next decade thanks to the expansion of the program, currency -- because of obamacare. spending in education and public safety is barely addressed. we spend more than $22 trillion of the next 10 years on our major entitlement programs. medicare, medicaid and social security. the president's budget would reduce that amount by only $413 billion, roughly one point

eight percent. no one seriously disputes that entitlement spending is the main driver of our death and deficit. areas they deficit like to ignore that reality and take the proverbial fan even further down the road. these programs need serious will -- restructure old reforms -- structural reforms. need an effort for members of parties. this budget fails to show this much needed courage. perhaps we all will be willing to come to the table and serious reforms to our entitlement programs. i believe the president wants to do the right thing. what we need now is action. as you know, january 1, i went to the senate floor and unveiled five bipartisan entitlement yours. five structural reforms to

medicare and medicaid that have been sported by republicans and democrats in the recent past. starting a hopes of bipartisan conversation on entitlement reform. i have shared these proposals with the president and i am ready and willing to work with him on solutions to these problems. to talking forward with you about this critical issues, and i thank you for being here and thank you mr. chairman. >> thank you, senator. secretary sibelius, i appreciate you coming here. a big job. tell us what you're thinking, let 'er rip. good morning and thank you chairman baucus and ranking member hatch and members of the committee. opportunity toe be with you today to discuss the president's 2014 budget with

the departmef and human services. this budget supports the overall goals of the president's budget andrengthening our economy promoting middle-class job growth area did it ensures that the american people will continue to benefit from the affordable care act. provide much-needed support for mental health services and take steps to address the ongoing tragedy of gun violence. for ouren education children during the critical early years to make sure they can succeed in the 21st century economy. secures america's leadership in health innovation so that we remain a magnet for the jobs of the future. it helps reduce the deficit in a balanced thomas sustainable way. theok forward to answering members questions about the budget. first i would really like to cover a few highlights. the affordable care act signed into law in march 2010 is already benefiting millions of americans.

make sure we continue to implement a law. by supporting the creation of new health insurance marketplaces, the budget will ensure that starting next january, americans in every state will be able to get quality insurance at an affordable price. our budg also address another issue that has been on all of our minds recently. mental health services and the ongoing epidemic of gun violence. i know mr. chairman that the senate later today will deal with legislation around keeping dangerous individuals from .etting their hands on a gun as a secretary of health and a mother and a new grandmother, i hope that the senate gives serious consideration to that ,ommon sense legislation bipartisan legislation that could make this tragedy seen every day on streets across america less than we see each

and every day. the vast majority of americans who struggle with mental almonds are not violent. recent tragedies have reminded us of the staggering toll that untreated mental almonds can take on our society. that is why our budget also proposes a major new investment to help ensure students and young adults get the mental health care they need, including trimming of 5000 additional mental health officials to join our workforce budget also supports the president called to provide every child in america with access to to high-quality, early learning services. it proposes additional investments in head start partnerships. it provides additional support to raise the quality of child care programs and promote evidence-based home visiting from a parent. together, these investments will create long-lasting positive

outcomes for families and provide future returns for the children and society at large. our budget also ensures that america remains a world leader in health innovation. investmentsnt new in nih will lead to new cures and treatments and help create good jobs. the budget provides further support for the development and use for compatible electronic health systems that have potential for helping with public health. even as our budget for the future, it helps reduce the long-term deficit to making sure --t programs like the care medicare or put on a more stable fiscal trajectory. medicare spending per beneficiary grew at just .4% in 2012. thanks in part to the $800 billion in savings already included in the affordable care act.

his 2014 budget would achieve even more savings. allow low income medicare beneficiaries to get their prescription drugs at lower medicaid rates. resulting in savings of more than $120 billion of the next 10 years. , the budget would generate an additional $370 billion in medicare savings over the next decade, on top of the savings already in the affordable care act. budget also our reflects our commitment to aggressively reducing waste across our department. opposing an increase in mandatory funding for our health care fraud and abuse control room. saves theive that taxpayers nearly eight dollars for every dollar spent last year. are investing an additional efforts to reduce improper payments in medicare, medicaid and strengthen our office of inspector general. this adds up to a budget cut it

by the administration's northstar of a thriving middle class or is it will promote job growth and keep our economy strong in the years to come while also helping to reduce the long-term deficit. i know many of you have questions, i am happy to take is now. thank you for having me here today. >> thank you. i have to leave and take a phone call, i will be back. senator hatch, what are you takeover. i will be read back. , i am curious as to how overall efforts under the health law, not that much of the initial funding husband pleaded -- depleted -- funding has been depleted. it seems to suggest you are diverging funds from other areas of the department toward implementation. halfestimates as much as

$1 billion will be moved from other portions of the budget. would you describe the authority under which you believe you have the ability to conduct such transfers and whether or not you believe that congress should be notified when these occur? >> we did a request additional funding with a continuing resolution in 2013. we are not given additional resources by the united states congress, although we have the duty to implement the law. , i have used both my transfer authority, which is astutorily in our budget well as the nonrecurring expense and for one time it cost and portion of funding for the

prevention fund to use for outreach and education. chairman baucus described the concern and questions in states around the country. we want to make sure that americans fully understand the benefits that are coming their way and the decisions that they can make. we have requested in the budget that is before you, the 2014 budget, an additional $1.5 billion to fully implement the affordable care act. asfederal medicaid spending a percentage of the economy, according to what -- it will increase by 25% of the next decade. driven by the affordable care expansion in long-term spending. that is more than $4 trillion over the next decade. that is not even counting the trillions of dollars states will spend on thecaid. according to

national governors association, medicaid represent the single largest portion of total state spending. priorudget backs off proposals to lower spending on medicaid, such as provider tax reductions. since thereouraging are bipartisan proposals on one have achieved significant savings and improved patient care. your predecessor under president should she that medicaid per capita caps mean states to are no deny coverage to a needy individual or family. it is a simple way to make sure that people who need medicaid are able to receive it. your fiscal year 2014 budget only proposes to save one half

andne percent in medicaid lacks any serious reforms to the medicaid row graham. -- program. while a not address one of the country's fundamental serious challenges? think there is a very positive story to tell about medicaid. i amformer governor, dealing with my former colleagues in the ceos each and every day. medicaid spending last year between 2011-2012 actually decreased by almost two percent per beneficiary or it decreased by 2%. that is virtually unheard of. a series ofed in what i would call innovative strategies around the dual eligible population. often those individuals who you

have referred to in nursing homes area around progress on reforming high-quality lower- cost medicaid healthcare delivery. irking with states who are best,d in what states it which is very innovative strategies looking at overall healthcare spending. think the medicaid story is one that is enormously positive, where governors are very much engaged. we have an very pleased that the areer of governors who interested in expanding their medicaid population and health benefits for some of the lowest income workers in a very strategy. workuld you be open to with us on bipartisan ideas to improve a should care and save money in the medicaid program? >> i would be happy to work with you and others on that.

q. >> thank you. i am a bit johnny one note on implementation of the law. specially sign up for exchanges, etc. very concerned that not enough is being done some are. are concerned. -- very concerned. at home, small businesses have no idea. the don't know what the rules are, they just don't know. , beingalking to one cpa straight with me, saying that his clients, small business people are throwing their hands up. he did not know what to tell them. just from a small business

perspective, let alone all the other issues that will arise here. as i discussed earlier and you well know among a lot of people have no idea about all of this. they just -- people just do not know a lot about it. i understand you're hired a contractor. i am worried that is going to be money down the drain. contractors like to make money. more than electing anything else. -- they like doing anything else. people will be really confused to aed to some thought one-stop shopping somehow. go to one location and get the answers. i just see a huge train wreck

coming down. we discussed this many times. i don't see any results yet. what can you do to help all these people around the country? as we have had these discussions a number of times, we certainly take outreach and education very seriously. it is one of the reasons i think we were incredibly as pointed -- disappointed that our request for additional resources for outreach and education were not made available. we have engaged in efforts with small business administration who is doing regular meetings with oure country regional personnel. we have just released a request for proposals for on the ground navigators. individuals who come out of the

faith community, the business community, the patient community, who will be available to answer questions, walk people through scenarios, both seminars. .e hold regular seminars we understand people have a lot of questions. they are deploying as many resources as we can to answer those questions and get folks ready to engage in open enrollment on october 1. >> do you have benchmarks? a certain number of people know what is going on? these polls show that we are not making much headway. early daysgoal -- from now, if that percentage is people knowrcent, where to go on do? businesses andng

getting a certain percent that feel confident? you need data. me anye never given data. you are just given the context, frankly. government is not a business, but you have to have some data, benchmarks to figure out how much progress you are or are not making. benchmarks forve how many people -- we don't intend to do polling and testing in terms of what it'll know. we do have some very specific openmarks around enrollment. we have a campaign and plan to lead up up to open enrollment. >> what is it? as we have discussed, there will be people on the ground starting this summer -- >> how many? i can't tell you at this point. >> at what point in the summer? what states?

it is the kind of information i'm asking for. you can only do a decent job if you know the answers to these questions. >> yes, sir. i would be happy to give you this specifics. we just put a request in. we don't have the numbers or information back to about how many people in which states are engaged on actively the ground. i will be happy to share that with you as we move forward. >> there are a lot of factors here. >> we will be focusing their quest for proposal for navigators at this point with the federal marketplaces will be in place. >> but as a navigator? will godividual who through training and be available to help educate and visuals or groups of people -- >> how many americans know what a navigator is? >> i have no idea. >> i bet it is not -- we have to

fear. i'm going to keep on this until i feel better about it. thank you. senator nelson. >> thank you mr. chairman. madame secretary, thank you for your public service. healthen we passed the care bill in this committee, i was kind of lonely and offering an amendment that -- there was great angst that was taken in the white house for my amendment which was that the federal government, in paying for drugs whenedicaid recipients, they begin 65 years of age, were suddenly eligible under medicare for their drugs with

the prescription drug bill. low and behold, the u.s. government, the taxpayers of america were not going to pay for the price of the drugs with the discounts or rebates that they paid when they were 64 years of age, and they turned 65 they got their drugs under medicare and we were paying premium prices for the same drugs. 10-13.dment was defeated very strong position was taken by the white house in opposition. the president has reversed course in this budget. when i offered the amendment, it saved 100 $17 billion.

now it is 123 billion savings in the president's budget and cbo or is it and says it is an excessive $140 billion. why the change? >> i think that the wisdom of your original proposal has finally been seen. , you and i question both worked at the state level in prior lives. having negotiated medicaid rates as a governor and then having that same individual pay into a premium class did not make a lot of sense. particularly as we are looking thisve dollars on important public insurance programs, but saving for the individual who is responsible for part of the drug benefit.

i think this proposal captures what you are trying to do years ago. it will save these important programs some significant dollars. at the state and federal level, which is all good news. >> you know the attacks against the president's proposal and research, reduce limit access, result in higher consumer prices. how do you respond to those attacks? >> we have a pretty good track record on medicaid negotiated rates and the wide variety of drugs available to individuals in the medicaid program. there is no question that the two will of juggle -- to --

dual eligible americans are often the most expensive population in any medicaid program in any state in the country. having a sensible and proven way to lower costs around the population while not rushing benefit is a win-win situation. we are losing a lot of money to medicare fraud. we are going to be having a hearing on this in the aging committee. can you give us some sense of -- do you see that we are going to be making any progress? what new activities trying to stop this hemorrhaging of all the money? peopleo bad in miami,

open up a storefront and there is no activity in the storefront. they start billing medicaid. just recently there was this person down there billing, did up getting $50 million for mental health services. that is one way to save a lot of money. >> i could not agree more. i think that is one of the reasons the president's budget has asked for additional resources.raud we have a very good story to tell. this president asked the attorney general and i to elevate the anti-fraud effort to cabinet level. we created a new joint task force and unfortunately you live in some of -- your state are

some of the hot spots in the country. we have implemented a variety of strategies. more on the ground strikes, more money than ever before, we doubled the amount returned to both the medicare trust fund and medicaid beneficiaries. re-ddition, implemented credentialing for some of the known areas where providers were just entering the program and billing. we have a much stricter or standard to get in in the first place. we have also and cemented addictive modeling -- implemented predictive modeling. it keeps track of billing irregularities. the same way a company could go after someone who suddenly bought five five flatscreen tvs

on your credit card. capabilityhave that within the medicaid system. we're trying to approach this from of old friends. i think the story is good. there is a lot more we could do. returning the most eight dollars for every dollar we spend lester is very good news. this is a huge program. thousands of providers, millions of dollars go out the door every day. we take fraud and abuse incredibly seriously and want to use more resources to really beef up the effort that has proven successful. closing iirman, in would just say that all the new doctors we are going to need to ,mplement the health care bill we can keep adding graduate medical education. .edicare subsidy for residents

that has happened in my state, your state, nevada. that is inadequate in the president's budget. >> senator robert. could i be so rude as to interject for one second -- last week i accommodated senator roberts to take the question out of my time. i have to leave, to read i have one relevant point is regard to chairman baucus's question. on the navigators. >> a am more than happy to yield. >> baucas as to the question about these navigators. i understand you are about to

to navigators.on is that correct? the medicalt >> loss ratio is putting most agents and insurance brokers in the business of selling insurance out of business because of the threshold. we are spending to $4 million to her navigators, but because of the rule, we are cutting out most of the people who buy the services in the private sector which cost the government nothing. one thing -- i have legislation some others to amend that. i think we need to revisit that rule and see what effect it actually has when people get credible information from people making a living doing it and have for years. to take inbe happy the legislation. there is no prohibition for agents and brokers to be navigators. stateges at both the

can designate agents and brokers as part of the funding stream to do the outreach. we certainly have not eliminated their ability to do their jobs and bring people into insurance companies as they have for a long time. -- medical loss ratio is deals with what is characterized as medical costs versus what is characterized as overhead costs. you are correct, the rule does not include an agent and broker salary or commission as part of what is characterized as a medical cost. >> i appreciate your looking at it. what a sickly doesn't preclude those people from being compensated at the way the ratio applies. easily be in a 20% of overhead.

they cannot be counted in the 80% that has to go to medical costs. >> thank you. >> i think the senator for his contribution in his question. and of the secretary will be taking a hard look at that, she was an insurance commissioner prior to becoming governor. she certainly has that background. that are3 hospitals designated critical path that -- access hospitals. in the budget, i noticed that we're going to take a whack at the critical asset -- access hospitals. and there is a mileage requirement. i remember days ago from hcwad somebody saying it was 100 miles, but it

was ok to not include them in because they had four-wheel- drive. if you could take a look at that, i would appreciate it. a line in, there is regards to ipad. my opinions are well known. i think we would be at odds with that. toient care, they are going set the medicare reimbursement court into a formula here. they are going to save $4.1 billion. critical access hospitals, 4.1, they are not even set up yet. i just don't understand if they haven't been set up, and we have no idea how the recommendations are going to , and we're going

to expand and strengthen them, i wish you a ticket look at that and see if you could get back to us. i apologize for having three questions to you, because of the time limit i wanted to cover these three. have died ande over 700 people have become ill as a result of the meningitis crisis. aboutalking obviously pharmacy compounding. the fda has put forth a proposal which has been didn't teach health -- he tilt on a blog, saying the funding would be necessary to do the necessary inspections. , so working on legislation are the members of the committee, hopefully that would be of help here.

both to guarantee the efficacy of the program and access to compounding. it is not mentioned in the president's budget. i have looked. we can't get a cost estimate. if you could provide that, with regards to the legislative proposal put together by the commissioner of the fda, i would greatly appreciate it. if you could comment on that or anything else. you have about two minutes. i willuld be happy to. try to get a specific cost estimate for the very important legislation that you and your colleagues are working on this which would give additional authorities over the nontraditional compounding and make sure that traditional compounding can move forward.

adon't think that the fda has legislative proposal that is specific. they have been working around some principles with the committee. that may be part of the confusion. they don't have a drafted piece of legislation. they have been providing technical assistance to the health committee. i will see where we are on a .ollar recommendation with ipod, the president has recently sent to the leadership , requests for recommendations for potential candidates. the legislation contemplates the president making appointments but in consultation with the house in the senate. those letters have been received by leadership. the president but it does suggest that the independent payment advisory board would not kick in unless medicare spending exceeded the inflation

cpr plus .5. we don't anticipate according to the latest cbo initiatives .hat that would hit until 2019 on the track that we are on. we are in the process of consulting with leadership around potential members. those members would have to be confirmed by the senate, so there will be multiple steps and opportunities before that board would ever occur. i share your concern about the incredible importance of critical aspects -- ask -- access. we will be >> i appreciate that, thank you.

>> center casey. >> thank you. madame secretary, thank you for being here today. this is hard work that you are doing. especially with regard to healthcare, in addition to the other responsibilities you have. i appreciate the time we spent prior to the hearing. i wanted to ask you about children, but as a preference to that, i wanted to note in the budget a couple of highlights, some of which you referred to. focusedthe budget that specifically on children, their mentioning, the home visiting program as well as early head start and the childcare partnerships, both of which you have set forth on page four. are so important,

and i want to commend you and the department for that. i know that nih, the proposed increase is $471 million. that is commendable and necessary. despite all of the challenges that we had if we are not investing there, we're making a big mistake. but i wanted to focus maybe two questions on children. first, with regard to the children's hospital graduate michael education program. i'm told that we have three great examples in pennsylvania, two in philly, one in pittsburgh. children in both cities and saint christopher's in philly. i'm told that these hospitals comprise less than 1% yet train -- of allf -- 49% pediatricians.

,his is a budget allocation which has been in the six figure millions. the proposal in the budget is just $88 million. funding for that program. i think that is a mistake. i don't agree with it. toon't know how we're going to get the trained pediatricians that we need. i think that the affordable care act -- if we don't have that investment. if you could give us the rationale for that $88 million. >> center, first of all, i don't disagree at all that the children's hospital's provide not only incredibly important service and health care for children but also training opportunities for pediatrician so they're sort of doing double duty. what the president of the budget medical education

direct costs. what is eliminated from the theet recommendation is overhead and administrative costs. we feel that this is sufficient children's hospital's are at other -- in his eyes as we would've made an budget times. but providing a direct cause for the number of residency slots that are currently in hospitals is one way to make sure that we train the pediatricians for the future. can spend some time on this because when you have a percent of hospitals providing that level of training, i think we should go back to work on that. so we can get back to and spent some time on that.

i also wanted to ask -- and i raise a similar question regarding maryland's tavener's confirmation hearing, as it relates to how children will fare in the new world of the and how you see the department's role in monitoring the impact on children with regard to the exchanges and making sure that if a child would, under a different set of a particular, iget level of care that they will so be it will get that same kind of care and treatment under the exchanges. >> i think it is a great question. , which doesgram offer enhanced benefits for children, as you know, continues to exist. one of the benefits for

children that is sort of an indirect benefit, but i think can be very real, is that there is a lot of evidence that indicates if parents have insurance, and children are more likely to go the doctor on a regular basis. if the family has a health home , in spite of the fact that a child may have access to services, if the family does not have family coverage, then the likelihood of actually accessing those services is .ignificantly diminished so i would say there are added benefits around family coverage that don't exist right now that will be the case in the future. and while the exchange program will not have a specific mandated package of benefits for --ldren, what i think does

we will watch that very closely. we would be delighted to continue to work with you and your office. looking out for america's children answered in one of the areas you've taken a great leadership role on peer and we would be happy to work with you at these plans are being implemented. >> i appreciate that. thepe that at some of benefits for medical homes play , that wouldlies have a positive impact on kids, especially children with chronic and complex medical conditions. >> certainly, the medical home model and coordinated care enhancedh offer some benefits for children who have, as you say, chronic or multiple conditions.

right now, that is segmented into a variety of specialists who may not coordinate with the family. so i think testing some of those models, while people often think of that as an older americans issue, i think there efit to our youngerwould b patients. >> thank you. madame secretary, thank you for your extraordinary service during a very difficult time. couple ofbring up a subjects in regards to the implementation of the affordable care act and how the budget submitted by the president would advance those goals. shortly after the passage of the act, you and i had a chance to talk about the commitment that we made to minority health and health disparities. the elevation of the institutes at nih and the offices and all of the relevant agencies, including hhs. to made a commitment then

adequately find those initiatives, and i thank you for following up on those commitments. there is some concern today as to whether there is adequate budget support to implement the type of grant making in the ,ffices, including your office and whether the institutes at has adequate resources to make the type of progress that we would like to see made as a matter of what is right policy for this country as well as smart policies to reduce healthcare costs. can you just give me an update as to how your strategy is being implemented to fund this commitment? >> yes, senator. i think that there is no question that we have taken very seriously the charge to not only track health disparities but reduce health disparities.

the passage of the affordable care act in the full implementation of the affordable care act will advance that cause probably faster than any other single thing that we could possibly do to close the gap in health coverage. having said that, while the some of the offices within the secretary's office may have a reduction of some grant funds, the overall budget has a significant increase in funding for minority health issues. and one that we take very seriously. i think there are a couple of additional -- a couple hundred million dollars both in hirsch and some funding within the nah -- nih. nih funding does not increase as significantly as we would like.

they also lost $1.5 billion through the sequester cuts. so we are in a more restrained situation then we would be otherwise with not only a tight budget moving forward but also a fairly significant cut in their grantmaking authority that hit in 2013. >> thank you. i understand the challenge of sequestration. i would just urge us to be as strategic as we can to make sure that that mission moves forward. i want to make a request of you to personally take a look at a regulation that has been issued as relation to pediatric dental care. ms. -- was before the committee. i questioned her among and it was before the record. you have the process of imposing a regulation that would allow for standalone pediatric dental policies that have separate adoptable's -- deductibles.

with no assurance that individuals will have that coverage. i believe both of those actions to theare contrary intent of congress, but also contrary to the legal ability, to issue such regulations. we intended that pediatric dental be unessential benefit. an essential budget -- essential benefit appeared most families will not reach $700 a year in pediatric dental care. why would they buy insurance, particularly if it is not going to be required? i believe that is contrary to what congress intended and contrary to law. i would ask that you personally review this regulation and the legal basis of this regulation

and make an independent judgment as a secretary as to you believe this is the right policy and the right to legal path for us to take, as it relates to be after dental. i will commit to that. i know that concerns have been raised about what is a proposed regulation. eriod is still open. but i hear your concerns. we've written from a number of people, and i will commit to taking a a personal look at exactly what the impact would be on a very families we serve. >> thank you. >> sure. chairman.ou, mr. madame secretary, welcome back. thank you for being here. i have worked with several of my colleagues on this committee on a white paper, which we issued

yesterday. it outlines concerns that we have about the electronic record program, created by the stimulus bill. one of the chief concerns is that the program was not thoughtfully planned and that cms and the office are insufficiently focused on the issue of interoperability. i'm also concerned that the office of the national coordinator has a philosophy that is focused on simply pushing federal taxpayer dollars out the door and using sort of the dollars out the door as a measure of success of the program without sufficient oversight of those payments. i am wondering if you agree with that. >> i do not. >> well, it is noted in our report that providers simply self-report, that they have met the necessary criteria to receive federal incentive pay schmidt -- payments for adoption of it. your agency's office of the inspector general h has warned that this could have problems.

medicare "does not verify the accuracy" of the self reported information by providers claiming the incentives will -- prior to the payment. the next question is -- do you self at it -- self testing of a problem in terms of them identifying a problem. >> we take the adoption of electronic health records very seriously. i cannot imagine any other industry which represents close to 17% of our gdp, which is trading information on paper files. so this is a significant move forward. we have about one third of the individual providers with another third in the queue and almost two thirds of the hospitals who are now in the process of adoption. i think that what has to be attested to, my understanding

is, will be firmly able to be when there thoroughly interoperability and go live in 2014. stage two,ul use that is not yet up and running. there is a lot of concern. it is the gold standard of electronic health records. if they can't stop to each other, it is not a venture that takes us very far. we understand that. but it is not live and running. it has been the focus of both the policy committee and the production committee from day one. is ms. tavener stated written comments that there will now be a delay in implementation of stage three. i asked the question, but given that it seems clear that the lead to interoperability is not possible from the requirements

from stage two to stage three. what are your plans for stage three that assures taxpayer dollars are being widely used to invest in interoperability? twice we have not gone to the implementation of stage two yet. so you are reading the final chapter before we launch it. theary 2014 is when portion of stage to that deals with meaningful use will be up and running. i think we have thoughtful plans and a timetable to move to stage three. but we don't right now have a plan about what could or could not happen because we need to fully implement stage two. >> but aren't the rules final for stage two? >> yes. in terms -- >> but it is not up and running yet. amthe thing i would say i concerned about, this is the

lead from the current stage to requirements, particularly with goinging an operability, to be very difficult in terms of the challenge faced by rural providers. nymex next question is -- what are you doing to ensure that small, rural dividers means are being considered in terms of stage two and ultimately stage three? >> senator, part of the framework of this implementation was really to create information and technology exchanges in every part of the country. they are focusing most specifically on small providers, knowing that the luxury to have a big it department or have people who could implement this in a significant period of time, we are not there. in every say, there are

individuals who are sort of -- i compare them to the farm extension services. bulk sewer on the ground literally, office to office, hospital to hospital, spend , what'show to convert the best strategies are. we have found in a say like kansas, which is not terribly different from the challenges that you see in your state, that that strategy has been in or mislead effective. small providers are engaged in roles with those extension operations. and find them to be there service team on the ground. i hope that as we move forward with this, that the focus really will be on the issue of operability. we have asked numerous times of about what is happening

with regards to an operability. maybe that a lot of providers are creating their own electronic records. but the idea that somehow they're going to be couldn't able to communicate with others .eems to be nonexistent so you have got these silos out there, but until they can talk to each other, we have not solve this problem. it seems like the focus of this -- a lot of money that has gone out the door -- that seems to be -- metric and said of what instead of what is the metric or measuring stick. >> i would say, again, senator, from the outset, and i would certainly agree with you that the northstar of whether electronic records work. it is not whether paper files are in somebody's computer but whether or not you can measure, share information across the state and across the country and conceivably across the

globe. so that has been part of the tomework of the formula look at what sort of it systems -- qualify,y him a what the specs have to be, it is part of what the specs have to be attested to, that a conversion to an electronic records system has a have the capacity to get to stage three along the way and demonstrated it does not have to be part of the operating system from day one, but it has to have the capacity to add that on. they are very specific specs as a part of the -- what qualifies for the incentive payments. so i think that has been part of what the technical committee that has been the advisor to the office of national coordinator from the beginning has been focused on. how, at the end of the day, you make sure that these systems actually work.

, andre strongly advised it came at the dismay of some of the biggest it companies, but we were strongly advised not to choose one system. not to have one winner in this market and everyone else a loser, but rather to focus on a series of specs that would make sure that these systems were inoperable but then allow providers and others to make conversions of the systems that any have or purchase variety of new equipment. that has really been the framework to having more open anrce, but certainly with operability at the end of the day. >> i don't know if -- i am glad to hear that you are focused on these specs. the self attestation model that is being used seems to lack the kind of documentary evidence

that the folks who are getting or eligible for some of the assistance are actually focused on these right metrics that you are talking about. i guess on the eye would say in conclusion is that we look forward to engaging with you and your department on this, and we will continue to solicit feedback about where they are. i think this report that we put out will maybe put a fine point on that. so thank you. >> ui. thank you for your help on president's budget. $460 million for the mental health blocking random services. i think that will go a long way

to helping states deal with these issues. i very much appreciate that. i want to follow-up on my colleague from pennsylvania's question. this is a big issue for all of us in the country with the shortage that we are looking at. something like 90,000 specialists and primary care physicians by 2020. for us in the whammy region, wyoming, alaska, idaho, washington, where we are even below the national average now. that is why we care so much about this issue. when it comes to figuring out the impact, he mentioned children's hospital, which i could probably say the same about seattle's children's hospital, but the issue is also trauma centers or burn centers. when you look at this reduction in indirect medical education, it impacts that workforce.

they have residents there that they are not reimbursed for under the medicare model. so how do we look at this issue when there is specialized training that goes on at these trauma centers. they want to get their graduate medical -- how do we look at this and make sure that these facilities can keep running and operating during this time? i think thatator, certainly the training of new doctors is of critical importance. we know what an important role graduate medical education funding through medicare plays in that training. very is why even in these difficult budget times, there was an attempt to make sure that we were funding the direct costs. as well as doing some where thereook at

were real gaps in services. a lot of the workforce analysis looking forward indicates that it is and primary care providers, geritol adjusts, others that we -- gerontologist s, others that we have a gap. we'd not only try to have a budget that supports the direct costs of graduate training but also shifts some of the unused gme slots from areas that may have been more focused on specialty care into my merry care pediatric care, g -- gerontology care, hoping that the efforts to address people's at theive care needs front and will be met with a healthcare provider.

so we would be interested in working with you and hearing from you about the impact of this on a critical sensor like the burn center in the trauma centers that you have in your area. >> thank you peered we will do you information on that. i do not know if that is the intended consequence, but people are concerned that that will be the intended consequence because those costs aren't covered. so maybe there isn't something we can do that. theou could comment to university of washington, we train so many primary care physicians, but we are also very high on the list, in the top five of institutions with nih funding. so this is a very big issue. we understand what you have done. these institutions were looking for -- hoping to get closer to $32 billion then $31.5 billion. for us, the total economic 8800 jobs research,

in wages.llion this will be a big impact for us. one of our professors was quoted in "the wall street journal was quoted as saying "people are asking me if i should leave ."ience to g given what is in the budget and what is being discussed at sequestration, we are having chilling effects and science. what we do to help mitigate the sequestration's impact on nah funding? >> the president has proposed a budget going forward and a way to have a sustained and balanced approach to both reducing the deficit but making some of the critical investments that we need to make. and actually, the budget anticipates moving -- >> sorry to interrupt, but we are all tears about the magnificent contribution for

brain research. thank you. >> i think that the example of the president's belief that we cannot cut our way to prosperity in the future, that we must invest and certainly scientific research is one of the most critical investments to keep the innovation and research at the front end. so he very much supports outlining the mapping strategy, which could have a huge impact, not only on tears of the future, autism toou think it alzheimer's, we want to get our arms around what is happening to health costs in the future, this kind of rain marketing -- brain mapping has an enormous impact. dr. collins estimates that there return, a seven to one that every dollar in research grants generates about seven

dollars in economic activity in the community where those rearch grants and up and turns of jobs and scientists. this is a win-win investment that the president believes in. >> i hope as we continue to talk about and see the impact of sequestration, the demonstration will speak out on this because we are -- it is a very shortsighted approach, particularly when it comes to the nih budget. i hope that we can get organizations and institutions, whether it is the institute of medicine or others, to put pencil to paper and really measure this, as you just did with that seven to one ratio. may be saving a few dollars now, but it will cost us millions if not billions more if we do not continue the investment in research. so i hope we can make that point to our colleagues here. thank you. i think senator portman, you are see why. -- >> thank you. i think i am lasted only.

thank you for being here. i would make the obvious point that that part of our budget is being squeezed more and more by the reality that the mandatory spending part of the budget, which is now 65% of the budget, which is the part that is on autopilot, that is not appropriated every year, is the fastest growing, and the biggest part of the budget. one reason the research dollars are tough to find and one reason children's hospital are concerned if they see the squeeze, including our great children's hospital in cincinnati. on the mandatory side of this budget, of course, the number one cost rubber is healthcare by far. the congressional budget office has just given us another report. this one is looking forward to the next 10 years, what is going to happen in terms of our budget. they say that there will be a 110% increase over the next decade from $800 billion to about $1.65 billion.

110% increase on the mandatory side and health spending. they make the point that if we do not address this problem -- -- this problem will continue to grow. it will bankrupt the country because you cannot raise income cast a levelgh to spending. it is indisputable that that is our number one problem in terms of the budget. i just wanted to get your thoughts on that. the white house has proposals in the budget that would reduce that growth, 100% -- from 110% down to 100%, but it is actually 104%. it includes the $90 billion and canceled sequestration cuts to medicare. so it is somewhere more than a 100 for -- 104% increase rather

than 110%. those structural reforms, the ,uestion is, with the trustees the trust fund is insolvent in 2024. with everyone who looked at this saying our number one driver in all of this is medicare, and the medicare funding trigger has not been a guard, so no proposal from the administration. , what do yous suggest in terms of dealing with this program -- with this problem, which everyone acknowledges? administration's plan to bring long-term solvency to our medicare program? >> the president is eager to work with congress to have a long-term strategy that both ensures that we keep the commitment that we made to seniors and others in the mid-

1960's. in their senior years as well as looking at the viability of funding and support for medicare and medicaid into the future. in the last three years, there ormouslyonymous -- en positive story to tell. per year alone, the beneficiary costs rose at the smallest level than it has ever done in history. as you know, part of the growth right now deals with demographics, not health costs. effort is very much under way to really rethink and read look at how we pay for , shifting from a

volume payment to a value payments, testing models for the first time ever that could lead to significantly better care at lower costs. those efforts are very much under way. medicaid spending is down to bank percent from 2011 to 2012. from 2011 to 2012. structurally, the cbo has revised its estimates recently based on that cost trend. we know that the president's budget on the table, the affordable care act acted -- added about eight years. the budget adds another four years. but if this cost trend continues say we coulduld do a further. we will be your to look at a longer-term strategy around how we make sure that the commitment to seniors and the most disabled americans are theilled and not shifted

cost onto them by destroying medicare as we know it, but also looking at the longer-term funding challenges. theo one is talking about storing medicare as we know it. here -- people are looking at sensible way to reform the program so it is strong. by the way, the budget office report is the one that came a few weeks ago, so it includes that data. these costs are unsustainable by any measure. so i hope you will look at some reform that is more structural. i know that you support in the budget some means testing, for instance, but i have to also to look at medicare part d. told you that the costs are 40% less than the original estimates. the cbo now reduces ten-year cost projections each of the

last three years. your deputy administrator has said that part d costs have remained quiet and expected to decline in 2014. in the past three years, the review has stayed essentially flat, about $30 a month. i believe this indicates that there is something going on in the party, which is that private sector has to compete for the business of tens of millions of seniors. that is one reason that those costs have been less than projected. i encourage you to learn from and not undermine part d. in your budget you target party again, particularly the medicare advance programs, which is radically important in our state. i would ask you to take a look at that part d success rate. i think that is where some of the reforms can and should be made.

thank you for your time today and your service. quite see why, senator. the why, senator. >> senator menendez. is a lot to a plot in the budget, certainly the hundred million investment to research all timers disease, something that's at my mothers life. the funny for community community health centers, incredibly important. the funding for community health centers. there are tough decisions to make. i think we did a lot of that in the affordable care act. real long-term savings can and should be found why encouraging the efficient delivery of healthcare. through measures such as increasing the use of electronic micro -- medical records. promoting the efficient the livery of medication. improving coordination between

acute and postacute providers to ensure the appropriate care setting. do you share those views as it relates to how we save money in other areas the echo -- in those areas? >> yes. ast is an enormous shift opposed to paying for volume. >> with that having been said, i'm a little dismayed at some of savings that are identified in the medicare program. .n my mind, another set of cuts i look at that and i say to , following onto senator portman's questions as it relates to bartee, isn't it isn't it true, that the part d costs about 40% than the original estimates and that the cbo has reduced cost projections by more than 100 million dollars a year for each of the last three years? >> yes, sir, that is accurate.

i think that some of the negotiating authority that you actually directed to the mss part of the affordable care act effect on somel of those are d negotiations. >> is in a further true that under the affordable care act that with the doughnut hole rebates and other cost containment provisions that beneficiaries have not only saved about $6 billion in a drug costs, but that their premiums have been essentially flat? >> yes, sir. >> given that the program is being -- proving to be successful in providing seniors access to the drugs that they needed among costs that continue to be below estimates, could you ensure that the imposition of medicaid start -- style part d program won't ultimately lead

to higher out-of-pocket costs for beneficiaries? >> senator, we are confident that the kind of drug strategies for provide available drugs dual eligibles are similar to what can be in place for those same individuals. when they're 64, shouldn't change to when they are 65. so we are confident that this will not only be a savings to the government, but actually make sure that beneficiaries have access to the critical drugs they need. >> so you don't believe that such a move will create restricted formularies? >> no, sir. >> you don't believe that it will create increased premiums. >> i think there is no question that there may be some formularies that are in place. as you know, dual eligible does

not lose any of his or her medicare benefits, so they must have the same benefits package -- >> so how do we ensure that the research and development that makes us the leader of the makes and that globally competitive, and maybe even more important and that creates life saving life enhancing drugs, does not get diminished? >> i share those, senator, but i feel that medicare part d, in haste of the fact that it i come in under the original estimates when it was first created, it still paying at a much more substantial rate than the veterans administration, then medicaid programs, and a variety of other programs. so we are still paying premium dollars for a number of those drugs. for these 9 million individuals, the budget assumes that on balance, this is an appropriate

way to save some dollars going forward and also make sure that those beneficiaries receive the critical medications that they need. >> i just don't think we will have the research and development. to hospital, when i raise with you, the issue that cms is pending, part of the affordable care act, it is a critical issue to jersey hospitals. we are awaiting a response. i just want to bring it up again because it is probably life or death for a whole host of new jersey hospitals. in line with hospitals, the medicare cuts to hospitals, the president's budget calls for about $11 billion in cuts to graduate medical education. $7 million cuts to children's graduate education programs. million cuts.

one of the things we heard about in attorney about the affordable care act is how do we have the healthcare workforce to deal with millions more who obviously we have been aspired to cover. we aresame time that going and looking at the age. back on theting programs specifically designed totrain new physicians go provide a needed the increase of the workforce that we recognize that we need? , i understand the concerns about the reduction in the graduate medical education. the budget is based on a design that would provide to hospitals and children's hospital the direct cost for those residency

training programs. it does not provide the overhead and administrative costs. we feel that having the direct costs continue to be paid should not diminish the number of residents who can be trained in those programs. again, it would not be a budget choice in a different budget time, but it is a time of the very scarce resources. we are trying to make sure that we can fulfill all our obligations. >> i appreciate this. it is a concern. at the end of the day, after all of the effort we created to provide coverage that was both affordable, which is a big goal at thecommittee, and same time amplify the universe of what americans would be further covered and presently are and stop having people going to the emergency room, it fortes the necessity physicians in the country. cutting this particular field, while i understand the challenges and the trade-offs,

it's just undermining the very essence of some of the goals that we intended under the affordable care act. i hope we will be able to visit it as we move forward. thank you, madam secretary. >> thank you, senator. but in secretary, -- madam secretary, i would like to ask you more about the concept of one-stop shopping, one resource center, so they don't have to deal with so many different agencies. does that make any sense? >> senator, there will be a one- stop shop with the shop exchange up and running in january 14. so business owners will be able to enter the marketplace , getgh a one-stop area the information about what is available, have a choice of lands -- plans.

if the business owner to qualify for the employer tax credit based on the number of employees and those who wages of the employees, that will automatically be part of the program. there will be a one-stop shop available to to small business owners who, as you know, right now often pay a 10% to 20% more in the market than their large competitors. we are very confident that they will have very -- have better choices, better prices, with the new marketplace that will be up and running. >> yeah. the real concern is from the business perspective more than it is consumers, individuals. theink i heard you say that shop will be delayed. >> no, sir. that is not accurate. the shop will be up and running. in every market in the country. for the states where the federal

government will be operating the marketplace, we are delaying one portion of the shop plan, which is that employers, if they choose to do so, could offer a wide for righty of plants to his or her employees. year one for the federal marketplaces, employers will have a choice of coverage for their employees, but that choice will then be passed along. year two and beyond for the federal marketplaces, the employer, if he or she chooses, could then turn to the employees and say you can choose among 15 different plans. for state-based marketplaces that employee chores could be available from day one. .ut we will have a two-step so 2014, all employers will have a choice. they love a choice of plans to offer their employees. they just will not be able to say to that employee, you can choose any plan in the shop

market. >> ok. let us know what help you need. it is a two-way street. >> i will be happy to do that. >> thank you. good luck. >> thank you. >> meeting is adjourned. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] the most35 is expensive weapons system in the history of the united states. to the of mankind, quite frankly. advance warplane that is to be is by the air force, navy and the marine corps. it is the replacement for the f-

16, the air force, for another -- a number of other place. it should be our new, advanced, all-purpose fighter jet. it is a plan that was supposed to be in these big -- and its guys fighting. it is still in development. it is a program that has gone tens of billions of dollars over budget. i borrowed into this program as a way to write about the overall challenges of the department of defense at it. -- defense budget. this term -- this plan is singular in its costs, the way it has been structured, delays. as i write in the piece, it's most effective defensive attribute may not be all of its radars and sensors and missiles and stealth technologies and ability to fight at supersonic speed, it may be the way it has been designed to evade budget